Industries - Our Cases

Case Examples

Construction Jams

When major construction started right next to their business, the owners of a recreational vehicle dealership were forced to deal with the noise, dust and large machinery as well as the permanent closure of one of their access points. The Ontario Ministry of Transportation retained us to quantify business losses and out-of-pocket costs. The loss report was jointly adopted by both sides and was a reference point in negotiating a successful settlement.

Car Dealership

This expropriation involved a used-automobile dealership that had to relocate because of the planned extension of the Spadina subway in Toronto. The owners called on us to quantify business losses, past and future, and assess out-of-pocket costs incurred in the forced relocation. This case is among those related to the six-stop subway expansion waiting to be heard by the Ontario Municipal Board.

Auto Industry Bailout

A Canadian government agency turned to us to perform the valuation of a “bail-out” investment in Canada’s automotive sector. The analysis was needed both for financial reporting and to assist in the timing of a sale once market conditions improved. We used a valuation model that reflected a variety of key inputs as well as the work of auto industry experts in Canada and the United States.

OSC Mandated Valuations

The Ontario Securities Commission’s rules require related party transactions of a certain threshold be accompanied by a formal independent valuation. So when two publicly traded automotive companies entered into a significant management sharing contract, they called on us to analyze the value of the long-term contract. Our valuation report was submitted in public filings pursuant to the OSC rules.

Case Examples

Energy Contract Dropped

We were retained to estimate the profits lost from the decision to cancel a contract to buy the production of an expanded ethanol plant. The analysis was complicated by federal and provincial government subsidies: some in place, some expiring, and some scheduled to come into force during the loss period. We also had to factor in the capital costs of the expansion. We provided loss calculations, prepared a report and provided expert testimony. The arbitration panel agreed significantly with our calculations.

Engine Oil Additive

CHS professionals were retained to help a major multinational oil company put a figure on damages in this patent infringement case involving an additive used in engine oil. Our assessment required a detailed analysis of the other side’s accounting system and the development of various approaches to determine the proportion of its profit attributable to the infringing component. We quantified damages and our analysis was used in settling the dispute.

Green Energy

CHS was retained by a publicly traded company that operates in the renewable energy field to put a value on a long-term management services agreement it wanted to buy out. The valuation required a solid grasp of the underlying business as well as a detailed understanding of the various formulas and operations to which management services fees applied. Our work helped the company determine a buy-out figure and reach an agreement quickly.

Questionable Deals

CHS was retained to investigate an oil explorer and producer suspected of accounting improprieties and carrying out non-arm’s length transactions and transactions oppressive to its own minority shareholders. A team of CHS investigators travelled to certain Caribbean countries to review documents and interview key individuals. Our forensic accounting report was entered into evidence at the trial and was accepted without restriction by all parties involved.

Case Examples

Credit Card Fees

This class action lawsuit involved allegations a financial institution was charging its credit card holders undisclosed foreign exchange fees on foreign currency transactions. We were hired to prepare an expert report quantifying total transactions and related fees over a 13-year period. Complete data was not available for all years and all credit card types, so we were required to develop an estimation methodology that would stand up to close scrutiny. We prepared a report and provided expert testimony. Our quantification methodology was accepted by the court and helped form the basis of the judgment.

Failed Labour Fund

When a labour-sponsored investment fund collapsed on allegations of mismanagement, we were retained to provide an opinion on the considerations appropriate to the awarding of individual damages. There were questions over the timing of valuations of the fund’s investments and the possibility of delayed write-downs, which made determining the underlying value of the fund at various times a complex issue. We performed an analysis and provided an expert report. The matter was resolved with concurrent certification and a court-approved settlement.

Securitization Sale

The value of a securitization company was at the heart of this financial services dispute, with disagreement over the earn-out calculations new management owed the former owners following the company’s sale. We prepared an expert report and provided testimony at arbitration proceedings. The arbitration award adopted the majority of our loss quantification findings.

Executive Terminated

When a senior executive in the financial services sector was terminated, we were asked to prepare an expert report and provide expert testimony at trial regarding the value of his equity interest in a company. The analysis required a quantification of foregone earnings and incentive compensation as well as a valuation of his equity interest in a privately-held investment management firm. The judge adopted the majority of our conclusions.

Policies Inflated

A large insurer turned to CHS when it suspected one of its agents was working with others to inflate insurance policy values and make improper withdrawals. Our forensic accountants traced 20,000 deposits and withdrawals through various records over a 17-year period. We prepared an expert report and testified at trial. The judge found for the company based on the findings of our report.

Misappropriated Funds

An investment bank called on our professionals after becoming concerned about the actions of one of its investment advisors. The forensic investigation required combing through every one of the adviser’s many client accounts to identify potentially questionable transactions. We ultimately identified several clients who had suffered a misappropriation of funds, which helped them recover their losses. Our report was also used to support the brokerage’s Proof of Loss claim with its insurer and as the basis to bring charges against the rogue investment adviser, which led to criminal conviction.

Unauthorized Trades

We were called in to trace the actions of an investment broker who had been making unauthorized trades and withdrawals on client accounts. Our forensic specialists traced more than $60 million of investors’ funds through 50 investment and bank accounts. The complex findings were presented at trial, and judgment was granted adopting the findings of our report.

Case Examples

Sales Reviewed

A water-treatment companyalleged that a key member of its management team who left to establish a competing business was in breach of fiduciary duty. We were retained to quantify the losses, which entailed conducting a review of historical sales, customer by customer, and comparing the results with those of the competing business. The company had several divisions and each required an individual assessment. Our report provided a framework for settlement discussions and the matter was ultimately resolved.

Case Examples

Government Contract

CHS was called in when a disagreement over the government contracting of office and printing equipment resulted in accusations of misrepresentations, breach of non-competition terms and bad faith. Working with industry professionals we determined sales and volume trends, and changes in technology, and also analyzed the company’s records for product mix and profitability -- which required consideration of 40 separate installations throughout Canada. We provided several expert reports quantifying the profits lost from various alleged breaches of the agreement of purchase and sale. The matter subsequently settled at mediation on the eve of arbitration proceedings.

Gomery Commission

CHS professionals were members of the investigative team for the Commission of Inquiry into the Sponsorship Program and Advertising Activities, struck to look into allegations of corruption within the Canadian government. The investigations centered on the actions of senior public officials and the flow of sponsorship and advertising funds between the government and certain recipients.

Listeriosis Investigation

CHS professionals were members of the investigative team asked to look into an outbreak of Listeriosis that cost 22 Canadians their lives and left another 35 people gravely ill. Retained by the lead investigator, we helped gather and sift through over six million pages of data from various sources to define the parties, actions and chronology of events that led to the outbreak.

Case Examples

Healthcare Venture Cancelled

CHS was engaged to assist in this case, which involved the cancellation of a new healthcare venture. Several of the key terms of the contract were in dispute, making the issue of quantifying damages especially challenging. The length of the contract was not explicitly stated nor was the number, or locations, of new business rollouts. We provided an expert report setting out several scenarios to reflect differing interpretations of the contract wording. The parties settled at mediation at a figure close to our scenarios.

Pharmaceuticals Infringement

We were retained by legal counsel on behalf of a brand pharmaceutical company to assist in the quantification of a loss asserted by a generic pharmaceutical company related to its alleged delay in market entry. We assisted our client in identifying, collecting and analyzing the relevant financial documents, preparing an expert report and supporting accounting schedules detailing our loss quantification. In addition, we attended at a Federal Court mediation related to this matter and assisted the client in settling this matter.

Case Examples

Garment Deal Repudiated

When a joint venture agreement to form a textile operation in the Middle East was repudiated, we were brought in to forecast both the expected cash flows had the agreement been fulfilled and the damages resulting from its cancellation. We quantified the losses and provided expert testimony before an arbitration proceeding. The arbitrator found in favour of our client and awarded damages based on our report.

Competing Business

When a former employee of an industrial products supplier started a competing business, we were called in by the company to quantify the losses associated with a breach of fiduciary duty claim. We assessed the damages and testified in court. The judge found the former employee had breached his duty towards his former company, which was awarded damages based on our report.

Steel Company Shares

When a major publicly traded steel company was restructured under CCAA court protection from its creditors, we were engaged to independently value the common shares. To do that we had to employ forecasts of the future demand for steel and steel prices as well as the projected costs of production, which included modernizing the manufacturing facilities. Our valuation was confirmed by the stock’s actual trading price once the company emerged from court protection.

Technology Buyout

We were retained as court-appointed valuators to determine the fair value of a new-technology film business for purposes of a shareholder buyout. The valuation had to be done on a retrospective basis, which meant we had to consider projections and the status of technology as at a historical valuation date. We conducted detailed interviews with company management and industry participants, and also considered previous valuations prepared by other firms. Our analysis was accepted by the court.

Accounting Questioned

When a large publicly traded company was accused of improprieties in its financial reporting, counsel to the special board committee investigating the matter needed investigative assistance. The allegations focused on the accounting treatment of certain expenses and the possible inadequate disclosure of related-party transactions. We were members of the investigative team that identified and analyzed the questionable transactions and accounting entries. The team reported its findings to the special committee, helping them deal with the various regulatory and enforcement agencies in Canada and the US.

Case Examples

Hidden Assets

Thenon-owning spouse turned to us in this separation case to prepare valuation and income calculations involving corporations with international operations. Our investigation uncovered undisclosed corporate entities located offshore. We questioned the transfer pricing arrangements that were minimizing taxes and profits in Canada and were, as a result, understating the value of the Canadian operations. Our analysis resulted in a settlement that reflected appropriate charges and income from all related companies.

Funds Diverted

This case involved the alleged theft of mortgage funds from a lawyer’s trust account. We were called in to investigate the accuracy of recorded accounting entries and trace the flow of funds. Our investigation confirmed that the money had been misappropriated and we also put a figure on the amount that was wrongfully diverted. Our findings were used in successful settlement negotiations with clients whose funds had gone missing.

Case Examples

Plaza Stopped

This real estate case involved a multi-million dollar breach of contract lawsuit over a planned shopping plaza that did not proceed. We were asked to quantify damages, which required us to assess not just the profitability of a hypothetical project but also the developer’s ability to complete it given changing market conditions. We prepared an expert damages report and testified at trial. The majority of our loss quantification findings were adopted by the court and upheld on appeal.

Negligence Claim

This case involved a claim for losses resulting from alleged negligence by a lawyer in drafting the exit clauses in a real estate agreement of purchase and sale. We were retained by defendants to assess the opposing expert’s estimates and prepare a series of alternative calculations that could be used for mediation or settlement. The opposing expert had proposed many scenarios. We helped get that whittled down to a single mutually-agreed upon scenario that reduced the damages quantum and led to the resolution of the matter on the eve of trial.

Establishing Exclusions

We were retained in this dispute to assess the value of a large group of companies specializing in manufacturing and real estate – and trace funds over a long period of time through various entities and family trusts in order to establish “exclusions” for family law purposes. We identified historical documents and records needed for production and helped retrieve them from many different parties. Our findings were presented as corporate ownership charts that detailed transactions, changes in ownership and traced the flow of funds. Our work successfully supported the exclusion claims.

Real Estate

When an investor decided to exercise a trigger in its shareholders’ agreement to acquire an equity stake in a company that owned several seniors residences and long-term care facilities, we were hired to perform the valuation. We worked closely with a real estate appraiser who valued the underlying properties, while we valued the related business and shares.

Real Estate Wrangle

This shareholder dispute involved a real estate holding company with a significant commercial portfolio. We were retained initially as mediator and subsequently as joint valuator. Our analysis required us to work with real estate appraisers, other valuators, quantity surveyors and engineers. The value we determined formed the basis for a settlement between the shareholders.

Kickback Scheme

This was a property-management case involving a $3 million overbilling and kickback scheme carried out by the purchasing manager of a large public company and colluding vendors. We we were retained to prepare an expert report, which was used as the basis for a fidelity insurance claim and an agreed statement of facts in criminal fraud proceedings. The purchasing manager and vendors pleaded guilty to the fraud and for the amounts set out in our reports.

Case Examples

NAFTA Challenge

When a US lumber company filed a NAFTA complaint alleging Canada had violated its obligations under the U.S.-Canada Softwood Lumber Agreement, the federal government asked us to perform a lost profits analysis. The company argued that quotas set out under the agreement violated the minimum standard of treatment guarantees provided for foreign investors under NAFTA. We performed an analysis of the company’s own accounting documents and were able to provide a methodology that demonstrated an error in the claim being asserted. Based on our analysis, the NAFTA tribunal rejected the US company’s application.

Farm Moved

We were retained by the owners of a corn and soybean farm who were forced to relocate when their land was expropriated to extend Highway 407, one of the largest highway construction projects ever in Ontario. Our report quantifying the business losses and out-of-pocket costs caused by the relocation formed the basis for settlement discussions. The matter settled in mediation.

Mining Services

The purchaser of a mining company called on us to value a mining-services business in connection with a call option. The seller had also submitted a separate expert’s report as required under the call-option agreement. A third valuation was sought to help adjudicate the dispute. It was very close to our valuation conclusion, and was used as the basis of the transaction price.

Case Examples

Advertising Questioned

CHS professionals were retained to help a major Canadian retailer respond to Competition Bureau allegations its advertising was misleading consumers about the regular and sale prices on several products. We conducted a detailed assessment of the number of units sold at regular prices versus sale prices, and the proportion of time each item was on sale as determined in an analysis of store flyers, in-store advertising and interviews with the retailer’s own advertising planners. After our report was issued, the matter was settled out of court.

Renovation Delayed

The owners of a combined gas station and convenience store had to reconfigure their property after a piece of their land was expropriated to build a new road. Both the expropriation and road construction were expected to have a negative impact on their existing business – but it also meant the owners had to delay plans to renovate their store, which had been expected to increase revenues. We were retained to quantify those business losses and significant out-of-pocket costs. Our expert report was used as the foundation for a mediation, and the matter settled.

Household Product

This patent dispute involved two multinational consumer-products giants and a popular household product. With infringement claims of over $100 million, it was one of the largest intellectual property cases ever in Canada. CHS professionals were asked to assess and quantify the sales, costs and profits of several relevant products over a 17-year period. The parties also asked us to prepare an expert report reflecting the parties’ agreed-upon numbers for the hearing reference. The matter settled out of court soon after the hearing reference.

Retailer Sold

This post-acquisition dispute stemmed from allegations of misrepresentations in a share purchase agreement and the financial statement disclosures of a major Canadian retailer. As consulting experts, we assessed the purchaser’s pricing and valuation deliberations, its due diligence and the application of Generally Accepted Accounting Principles. The detailed quantification analyses was used as the foundation for calculating the level of damages. Judgment was in favour of our client.

European Agency

A company that operates a fur-auction house in Canada retained us to provide business valuation advisory services in connection with its proposed acquisition of a European fur agency. We were closely involved in the acquisition discussions and our valuation model formed the basis of the price negotiations.

Case Examples

Video Gaming

This case involved a video-game electronics and entertainment company under CCCA court protection from its creditors. We were retained to prepare a valuation of the en bloc equity and of the specific equity interest of one investor. Our report was used by a number of equity holders and creditors to negotiate the successful restructuring of equity interests in the company.

Entertainment Proposal

When a shareholder dispute at international entertainment company led to a potential buy-out proposal, we were asked to value the company and review the valuations prepared by experts for the other side. We attended various settlement negotiations as part of our mandate and helped bridge the gap between the two positions.

Team Value

CHS professionals have quantified business values and contract damages for professional sports teams in NHL hockey and MLB baseball. In each case, we have prepared comprehensive reports for hearings, which helped form the basis of settlements and court awards.

Case Examples

Cutting-Edge Technology

We were retained to help in the acquisition of a company involved in RFID, or radio frequency identification technology, which uses radio-frequency electromagnetic fields to transfer data wirelessly and both identify and tag objects. Our role was to prepare a purchase price allocation, appraising the assets and liabilities being acquired to determine their fair market value. That required an in-depth analysis and understanding of the cutting-edge technology, its applications and its future potential.

Technology Tax Issues

We have prepared several independent valuations for tax filing purposes including of futures-trading software, logistical software and other intangibles for matters before the Tax Court of Canada. The valuations have been used in court proceedings or in settlement negotiations.

Case Examples

Off-Shore Funds

This shareholder dispute in the transportation industry involved the value of a captive insurance company. We were called in to prepare an expert report and provide testimony at arbitration. The valuation involved Canadian and off-shore corporations and also extended to a review of alleged misappropriation of funds. The arbitration award adopted the majority our findings.

Inflated Costs

CHS was retained by an insurance company to review potential losses for a claim filed under a fidelity policy. The policyholder, a transportation company, had discovered one if its US procurement managers was accessing the company’s server records to change orders and inflate costs, splitting the profits with the service providers involved. We analyzed the company’s Proof of Loss claim, conducted several interviews, and provided the insurer with a preliminary range of possible losses. Our work helped the parties settle the matter.

Overstated Earnings

Our professionals were retained to investigate allegations of fraud and financial statement misrepresentation involving a $100 million acquisition in the transportation sector. It was determined that the company had overstated its reported earnings over a number of years, and had successfully managed to conceal it from the external auditors and a due-diligence review despite a number of red flags. Our professionals reported on the facts underlying the financial statement fraud and the economic loss that resulted. We helped legal counsel and the client reach a settlement with the various parties involved.